Morning Call 9/4/26

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1:00Morgan Brennan: Diesel hits a record high. I'm Morgan Brennan, and this is your Morning Call.

1:16Morgan Brennan: Good Friday morning. Let's get a look at U.S. stock futures after Wall Street's best day in a month. Big rally, major gains, more than 1 percent for all the major averages yesterday, which has taken us into the green for the major averages on the week. You can see it's a little bit of a mixed picture here this morning, pre-market though. The S &P 500 is poised to open up less than one point right now. The Dow down 26 points and the Nasdaq poised for a gain of 113 points. Meantime, we're focused on yields as we've seen some stabilization, we'll call it, in the global yields, global bond market.

1:52Morgan Brennan: So take a look at what we're seeing in treasuries right now. U.S. 10-year Treasury yielding 4.75 percent. So we're off the highs that we saw earlier in trading in this week. And the Fed-sensitive two-year Treasury, 4.34 percent. The third-year Treasury yielding 5.23 percent. Let's get a check on the dollar index, too, which is a bit firmer this morning after we saw worst day for the dollar index since, we'll say, mid-August yesterday. The level there, 99.07. And speaking of currencies, some of the big moves and the volatility we have seen across the FX markets this week has been tied to the yen.

2:26Morgan Brennan: So let's get a check there as well, because the yen is retreating this morning against the dollar. And that was after a very big spike that we saw earlier this week. Still on pace, though, for its strongest week of gains since late July. And you can see the level right here still trading around a 156 per dollar breaking this morning. The energy sector, the price of diesel hitting an all time high. That's according to triple a national average for a gallon is now sitting at$5.85, and that is surpassing the previous high that was hit back in 2022. So if we watch the rest of the energy sector right now with the WTI on pace for the best week since mid-July, under a little bit of pressure this morning, down about half a percent, still trading just below$91 a barrel.

3:12Morgan Brennan: Brent is also down for actually right now trading around$95 a barrel. But let's see how Europe and Asia are faring this morning. Ben Boulos is in London with the trade. Ben.

3:26Hello, good morning to you, Morgan. Yes, European equities really treading water, putting the pan-European Stock 600 on track for roughly a 1 % weekly drop. Investors really waiting for those all-important non-farm payrolls figures due out later today on your side of the Atlantic. But crude oil prices have eased a touch, not enough, though, to significantly lift European equities. Strongest sectors at the moment are tech, travel and leisure and car makers, but none of them even notching a 1 % gain. This is the picture on the key regional benchmarks. As you can see, hardly deviating from the flatline there, the Italian market down, underperforming its peers.

4:07Meanwhile, the picture in Asian equity markets, while the indices there rose on Friday as expectations of a near-term Fed rate increase cooled off, with some regional currencies also gaining ground. Now, Japan's Nikkei share average managed to snap what had been a four-session slide. It was driven higher by a 12 % rally in index heavyweight SoftBank Group. Also, a sharp fall in Japanese government bonds helped to give equities a boost. The 10-year JGB yield falling more than six basis points. The sort of fall in yields that I imagine the U.S. Treasury would quite like to see at some point as well.

4:46Morgan, it's back to you.

4:47Morgan Brennan: I suspect you're right. Certainly policymakers and maybe consumers too would like to see that. Ben Boulos, thank you. Have a wonderful weekend. Let's get to this morning's top market story and the August jobs report. That's out in just a little over three hours from now. Economists expecting that U.S. employers added 53 ,000 new jobs last month. That's after losing 23 ,000 back in July. Probabilities on Calci painting a slightly weaker picture with just 46 percent expecting a number that is above 50 ,000. Unemployment rate meantime expected to hold steady at 4.1 percent. And today's report is coming just two weeks ahead of the next Federal Reserve interest rate decision.

5:24Morgan Brennan: And odds of a hold are creeping up in the past last 24 hours or so, with interest rate traders split down the middle between a hold and a 25 basis point hike. Users on Calci leaning more towards no policy change. That's something that was echoed by Fed Governor Chris Waller to Reuters yesterday. The short version is that while inflation remains meaningfully above the Federal Open Market Committee's 2 percent goal, recent data suggests we are finally seeing some signs of disinflation. Now, if this continues in the data over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting.

6:08Morgan Brennan: Joining me now, Dana Peterson, chief economist at the Conference Board. Dana, it's great to have you on. I do want to get your reactions to Governor Waller's comments, because similar to what we heard from Fed Chair Warsh last week, in the sense that labor market is not giving or does not seem to be giving some of these policymakers cause for concern right now. The real focus does seem to be on inflation. We're going to get CPI and PPI next week. How to understand it? Yes. Basically, the Fed is faced with a conundrum. It's like if we don't see slower inflation readings and we probably need to hike because that's what markets are expecting.

6:47But also, we want to make sure that people maintain their confidence in us, the Fed, to ensure price stability. However, when we look at labor market indicators, the labor market seems to be fairly steady. Yes, payroll gains are pretty small and some of them are negative. But when you look at the level, most people are still working. The unemployment rate is low. And if it should tick up this week, today, when we see the numbers, it's likely to reflect the fact that labor force participation has fallen again. But overall, we're seeing that the labor market is fine. Inflation measures are slowing.

7:28So perhaps a whole makes sense.

7:30Morgan Brennan: Is the composition of the labor market changing? If you go under the hood, beyond the top line numbers for something like non-farms payroll, is that where we're seeing really the action in terms of where people are finding jobs, how people are finding jobs, and whether people are finding jobs? Yes, well, let's start with jolts. The data came out earlier this week for July, and it still indicates that most people are not finding jobs. So companies are not really hiring, but they're also not firing. Meanwhile, many people are not quitting. And so you still have this low hire, low fire dynamic in the labor market.

8:10So looking forward to August payrolls, it's probably going to be the usual suspects underneath the headline, driving where the headline goes. And so certainly it's going to be tech, finance, transportation, warehousing. Some of the big retailers are probably going to continue to cut jobs. Meanwhile, we're probably going to continue to see increases in employment in those areas that are suffering from labor shortages, like health care and hospitality and construction and even leisure. So given those things, we don't really know what kind of reading we're going to get. And usually August is a tough month of forecast.

8:52And historically, August usually comes in lower than what markets consensus expects.

8:59Morgan Brennan: With that in mind, if we shift to the other piece of the Fed's dual mandate, inflation, you've got diesel at record prices. We tend to talk a lot about gas prices because consumers see that, you know, most quickly and impact spending patterns potentially. But diesel radiates out with much more faster impacts on broader inflation. So how are you factoring that into the picture here as we do look for some of these key readings coming into the fall? Indeed, diesel prices being elevated means higher consumer prices later because it feeds through the supply chain. And so this does factor into our own forecast where we anticipate that the oil price shocks from earlier this year and even the spikes over the summer will be through the supply chain and continue to keep commodity prices.

9:55and then everything that depends upon commodity prices elevated through the end of this year and into next year. And so we still think there's going to be resistance to inflation cooling. But the good news is that shelter costs are coming down and consumers, I don't know if this is good or bad news, but we are seeing consumers purchase less. And so we could start seeing that demand erosion, which would prompt many companies to start cutting prices. And that would also help slow inflation. Dana Peterson, appreciate it.

10:31Morgan Brennan: Thanks for kicking off the hour with me. We're going to hear more on the White House's take on the jobs report when National Economic Council Director Kevin Hassett joins Squawk on the Street in a first on CNBC interview. That kicks off at 9 a.m. Eastern. Well, meantime, we've got a lot more to come here on Morning Call, including shares of SpaceX doing something for the first time in two months. First, though, we've got big companies making big bets on Venezuelan crude. But how long before it makes a real impact on the economy? And you see it with your gas tank. And later, no Musk, no problem for Tesla and its cyber cap rollout in Austin, Texas.

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13:16Morgan Brennan: Welcome back to Morning Call. Chevron, GE Vinova, and Italy's Eni announcing major oil and energy investments in Venezuela this week. That's following a separate deal struck by President Trump last week for the U.S. to gain long-term access to a fifth of the country's oil reserves. In a note on Wednesday, Goldman Sachs saying it expects Venezuela's production to edge higher, but doesn't see output returning to pre-2018 levels above 2 million barrels per day for the next few years. At a White House briefing yesterday, Vice President J.D. Vance defending the U.S. deal, calling it an example of smart foreign policy.

13:49It's very much a win-win thing. We're very proud of it. And I also just think that it gives supply stability in the energy market. I think if we've learned anything over the last six months, but importantly, if we've learned anything over the last 40 years, it's that these things, the supply of critical minerals and resources really matters. We had an administration for a very long time that underinvested in this stuff, and now we're trying to change that, and we're doing so quite successfully.

14:15Morgan Brennan: Vance's comments coming after Energy Secretary Chris Wright spoke with CNBC from Venezuela on Wednesday, where he expressed confidence that these deals will have a positive impact on both countries. I think we'll be well over a million and a half barrels a day by the first half of next year. And Venezuelan production will be over two million barrels a day by the end of this decade. Well, joining me now is Henrietta Trez, co-founder and director of economic policy at Veda Partners, and Pedro Borelli, founder and CEO of B &V Advisors, a former board member at Venezuela's state-owned oil company, Pedevesa.

14:50Morgan Brennan: Wonderful to have you both here. Pedro, I'm going to start this conversation with you. I do want to get your reaction to what we just heard from the energy secretary about the possibility of one and a half million barrels per day as soon as the first half of next year. I actually believe that we have to separate what Secretary Wright is talking about, which is the deal that he witnessed between Chevron and other companies, and the more grotesque deal that Vice President Vance is defending that is basically almost for show. And if it's not for show, I think it's actually condemning the U.S.'s policy to Venezuela to even more derision and tension.

15:32So two very separate deals. OK, I think that nothing is going to change materially in supply. Keep in mind that when Hugo Chavez came to power, Venezuela in 1999, Venezuela was producing 3.2 million barrels. and we had a plan to move to 6 million barrels, which is almost fully funded and fully structured, 2.5 million of those incremental barrels would come to the United States. So talking about security, that was security. It was negotiated. It was understood. It was even within a framework of something much more intelligent than anything that I've heard in the last months, which is energy security within the hemisphere, which the Clinton administration had been talking to from Canada to Argentina, to all the energy producers in the region and saying, can we look at the energy supply and demand and wean ourselves off extra hemispheric oil?

16:33It's Hugo Chavez who came in, destroyed that policy over these years in front of everybody watching it. Venezuela became completely unreliable way before the sanctions. It became irrelevant. Not much of the Trump administration did in the first term. They actually added the sanctions, which even reduced the weight of Venezuela. So my sense is that this is the deal that Vance is defending, the deal that Rubio put together, is a very, very sloppy deal that I think has more to do with covering up for what's happened in Iran and trying to sell to the electorate that the president has sold something.

17:15As you'll see in the next few days, the way they structure this deal is going to create problems in the U.S. and problems in Venezuela that are much bigger than what anybody anticipated.

17:26Morgan Brennan: OK, I want to dig a little more into that with you from the operating side and what that's what that's going to take. But first, Henry, let me bring you into the conversation because I do want to get your reaction to that deal, which involves a 25 percent equity stake in North American Blue Energy Partners. This is a Venezuelan company. The stake being taken through the Office of Strategic Capital within the Pentagon and certainly raising questions about legality, constitutionality in Venezuela. But also, as we look to midterm elections, a new composition of Congress at the end of this year, going to raise some questions about legality and validity and whether lawmakers will go forward with it here in the U.S.

18:04Morgan Brennan: as well. absolutely those are important questions morgan and i'd say the market is proving pedro's point here as we see the crude is up seven percent despite this announcement about a deal in venezuela the market is not buying what the president is selling here and we're going to see that and you continue to see it at the white house this week with the refiners who are trying to stay vigilant and stay in front of the president and say hey we are working at capacity this deal with Venezuela is not going to change that. So on the constitutionality front, I think that the key question is, what is Congress going to do about this?

18:38Is anybody going to ratify it to the point where you could anticipate that there would be an orderly, consistent policy from the United States from one administration to the next, let alone Venezuela's administrations into the future? And to that, I would say it's very telling that yesterday Speaker Johnson, a Republican from Louisiana, said that Congress is going to actually leave town. They canceled their last two weeks of session. So there's not going to be a cohesive strategy to codify this, to turn it into anything that the United States can bank on or that markets and investors can sit back and say, hey, maybe crude has another option here.

19:18That's not what's being internalized by the markets. That's not what's being delivered by Congress. And so this is the administration acting alone in a space that is very inconsistent. We do not have the details, neither from Chevron or Exxon, about what's going to come next, let alone what's happening in Venezuela. So there's a long way to go here.

19:36Morgan Brennan: Yeah. I mean, in terms of this deal that the U.S. would be taking an equity stake in Pedro, I mean, North American Blue Energy Partners, they've gone from over the past, call it two years, tens of thousands of barrels per day in oil being extracted from Venezuela to hundreds of thousands of barrels per day. I realize that's still a very small baseline, and that's very different than millions of barrels per day. But they do have a track record there. So whether it's through that deal or whether it's through deals with the likes of Chevron, how much oil can actually be brought online here, how quickly and how meaningful is that when you have today diesel at record highs.

20:14Morgan Brennan: And we know this is the type of oil that goes into refining for some of these products that are going to matter ultimately to businesses and consumers. I don't think this is going to change anything in the supply and demand in the world or in the United States. Venezuela was producing 800 ,000 barrels by the time Maduro was extracted. It's producing 1.1 million barrels. That's the total increment. If Venezuela gets to 2 million barrels in four years, that's a lot. That increment is not really going to change anything in a market, an oil market of 110 million barrels a day. So my sense is that an administration that completely miscalculated, did not understand the risk or the weakness of the choke point of the Strait of Hormuz, is now trying to create a show.

21:04But they're doing it in an incredible way by investing in a company of the poster boy of corruption in Venezuela. I mean, Mr. Betancourt is literally, I mean, his money, the money that he has invested in this business that now the Pentagon is going to take 35 percent off, he made out of corrupt deals where he overcharged the Venezuelan government$3 billion for a whole bunch of emergency electrical plants that produce nothing and none of them are functioning right now. The United States picking Betancourt as their partner for such a crazy deal, such a unique deal of inserting yourself directly in ownership in equity in Venezuela.

21:51It's almost the equivalent of picking Betancourt of, I don't know, putting Jeffrey Epstein as a secretary of education. I mean, it's bizarre.

22:01Morgan Brennan: Henrietta, we're going to do double duty with you, but just very quickly here. Do you want to get your final thoughts on this topic specifically with energy prices, such a big part of the focus for midterm elections? You know, the real struggle is that we've been concerned about prices and affordability all year. But since the war with Iran started, what has catapulted to the top of the concern of Americans nationwide, independents, Republicans, Democrats, is gas prices. And they can just easily see that diesel is reaching record rates and gas has been over four dollars a gallon for half of the year.

22:36It's the duration of this pain that's really jarring and a problem for the electorate, because at the beginning of the war, you know, they were paying three, four hundred dollars more annually for gas. Now it's$700. You can see it in the credit card data. American voters are very anxious about the duration of this war because gas at$4 means you're spending, you know,$120 just to fill up the tank of the most popular truck in America. That's a real problem. And that's what voters are taking with them to the polls this year and why you see Democrats leading on the generic ballot. it. It's a problem specifically with the war, with energy prices, with the lack of a deal on affordability.

23:14So that's the focal point and why we should be anxious as investor communities about what might come next from the White House to combat this message. Is it an export control ban? Congress left town, as I said, so there's no way to reduce the gas tax, for example, and provide real relief for consumers. And that's that's what keeps me on alert right now going into November 3rd.

23:34Morgan Brennan: Okay. Pedro, thank you. Henrietta, we will see you again a little bit later when you join the call crew. Straight ahead, another rough quarter for Lululemon, its new CEO. Shares are sinking ahead of the open. But first, let's also check on shares of SpaceX after closing up more than 6 % yesterday. The company's market cap is now back above$2 trillion, first time in nearly two months. You can see up another half a percent this morning, trading right around$150.48 a share. So testing that key level that we've been talking about in recent weeks when it comes to SpaceX. We'll be right back. Life is full of surprises.

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25:55Serious allergic reactions and severe eczema-like skin reactions may occur. Learn more at 1-844-COSENTICS or cosentics.com. Don't let mysterious symptoms go unsolved. Talk to your doctor about Cosentics.

26:08Morgan Brennan: Welcome back to Morning Call. We're getting a check on some of this morning's big stock movers. Lululemon is tumbling after second quarter revenue and same store sales missed forecasts. The company cut its full year guidance for the second straight quarter as well. And by the way, expectations are very low going into this report. The retailer saw a, quote, greater than expected slowdown in some of its core categories, including leggings, and says, quote, negative commentary on social media also affected performance. The results coming a week before new CEO Heidi O 'Neill takes the top job. You can see those shares are down almost 19 percent right now pre-market.

26:39Morgan Brennan: And shares of DocuSign, those are higher. After reporting second quarter earnings and revenue, that topped estimates. The digital document signing platform also raising its annual sales outlook for the second time this year, citing a boost from AI-related demand. Those shares are up about half a percent. Zscaler, meantime, reporting a narrower fourth-quarter loss. Revenue topped estimates, and the company is raising its guidance for the year as AI helps drive demand for its cybersecurity products. Zscaler also plans to restructure and cut 3 percent of its workforce as it shifts resources to support its growth and AI initiatives.

27:11Morgan Brennan: Those shares, though, down 4 percent. Keep in mind, we've had a big run-up in cybersecurity stocks in the last couple weeks. Zscaler's CEO will have much more on the quarter in the state of the industry in a first on CNBC interview that kicks off just after 10 a.m. Eastern. Still on deck here, an IPO pipeline health check, a little bit of pun intended. The latest company getting set to ring the opening bell at the NASDAQ with its public market debut with a little help from Robinhood. Morning call. We'll be right back. I'm Morgan Brennan. Welcome back to Morning Call. Let's get a check on U.S. stock futures after Wall Street's best day in a month with all the major averages finishing up more than 1 % yesterday.

27:51Morgan Brennan: You can see it's a mixed picture here this morning. S &P is poised to open down about four or five points. Dow down 53 points and the Nasdaq up 85 points. We are on pace as of right now for a winning week in large part because of the rebound we saw in the major averages yesterday. The Russell 2000 is the exception there. But yield shock continues to be in focus. And perhaps the way we should frame it this morning is stabilization. So you can see right here, if we take a check on Treasury yields, the Fed-sensitive two-year Treasury yielding 4.33 percent. We continue to see that climb this week.

28:24Morgan Brennan: But we're seeing a breather at the longer end of the curve. So 10-year Treasury is 4.75 percent right now. Third-year Treasury, 5.23 percent. Speaking to our colleagues in Europe this morning, though, Allianz's Mohamed El-Aryan telling investors that they should expect the sell-off of the global government bonds to continue. I don't see any appetite in the U.S. for immediate fiscal consolidation. So I suspect we will continue to see upward pressures on yield. All right. Well, if we take a look at the dollar index as well, a little stronger here this morning. Dollar index levels 99.10. Speaking of currencies, we've seen some volatility in FX this week, particularly in Japan.

29:07Morgan Brennan: So let's get a check on what we've seen in the yen after a big spike in the yen earlier this week, giving back a little of yesterday's move here. But we're still hovering around 156 per dollar, about 2.4 percent stronger week on week for the yen. That's probably the best performance for the yen, weekly performance for the yen in about a month and a half. Let's take a look at the energy trade and what we're seeing across that complex right now. Now, WTI is on pace for its best week since mid-July, taking a bit of a breather here this morning, down about half a percent, back below$91 a barrel. Brent crude is down fractionally right now, trading around$95 a barrel.

29:43Morgan Brennan: We're also watching the price of diesel because that has hit an all-time high, according to AAA. National gallon, national average for a gallon is now sitting at$5.85. That surpasses the previous high that was hit back in 2022. Let's get a check on global markets as well. mostly positive finish to trading in Asia. Nikkei and Kospi leading the gains there. And if we get a check on early trade in Europe, you could see fractional losses this morning. We're essentially flat for many of the major averages across the world for the week in this final week of summer. But if we check on some of the morning's latest headlines, Tesla unveiling its two-seat CyberCab at an event in Austin, Texas yesterday, offering a new look at the self-driving vehicle.

30:28Morgan Brennan: CEO Elon Musk has said that it's key to the company's future, autonomous driving and these robo taxis, also announcing rides in, quote, limited areas of Austin as safety regulators continue to evaluate this car, which has no pedals, no steering wheel, no LiDAR technology. Elon Musk was not at the event. Tesla shares, though, have been on a tear in recent weeks, closing up more than 5 percent yesterday of nearly 15 percent over the past month. But as you can see right there on your screen, down a bit this morning, about two and a half percent lower pre-market. Meantime, Adobe naming a new CEO to succeed longtime chief Shantanu Narayan.

31:07Morgan Brennan: That's after 18 years at the helm. The new CEO is an MIT graduate who joined Adobe back in 2020 to lead its digital experience business. He takes the top job starting December 1st. Shares of Adobe are lower as well pre-market. But health and fitness ringmaker Ora filing for its initial public offering. And in its filing, the company reported a net loss of$924 million on$1.2 billion in sales in the nine months ending June 30th. The filing did not disclose the amount of money Ora intends to raise. But it does plan to list on the NASDAQ under the ticker OURA with 18 underwriting firms, including Robinhood.

31:51Morgan Brennan: Well, just one day after OpenAI's Astra entered the AGI era, that's according to the company, huge headline there, Anthropic reportedly in the final stages of expanding its revolving credit facility to$15 billion ahead of its highly anticipated IPO with Morgan Stanley leading the deal. Expectations is we could get a prospectus as soon as next week. The company is looking to raise as much as SpaceX or more when it goes public. And speaking of AI, checking the most popular AI platforms by token volume this week, as tracked by Open Router, a site that allows access to different models, users on prediction market Kalshi have Tencent on top.

32:33Morgan Brennan: That's followed by OpenAI and DeepSeek. In other words, in terms of token usage, two of the top three names are Chinese companies. And Treasury Secretary Scott Bessent says the EU has formally joined Operation Economic Outcast, sanctioning Iran and isolating it from the global financial system. Well, let's turn to commodities and the price of gold. It's fighting to close out the week in the green, down fractionally right now. If it's able to do so, though, that would be its sixth positive week in the last seven. A rebound's been taking shape in the precious metal, up almost 9.5 percent in the last two months.

33:08Morgan Brennan: Still more than$1 ,000 away from its record high of over$5 ,600 an ounce. That was hit earlier this year. One company riding the renewed enthusiasm, though, is Alamos Gold. The stock is up nearly 20 percent over the past two months. And as you can see right there on your screen, up another almost half a percent right now pre-market. So for more, let's bring in John McCluskey, the company's CEO and founder. John, it's great to have you on the show. And that's really where I want to start with you. This rebound we have seen in gold. How much of this is tied to other markets like treasuries, treasury yields and the dollar?

33:43Morgan Brennan: How much of this is something different? I think you're asking a question you know the answer to. They're all very closely tied together. And, you know, the goings on these days in the bond market, what's going on with the dollar and the concern around, you know, this$40 trillion threshold in the U.S., that is all playing a direct role in what's going on with gold. It's interesting. We talk a lot about the renewal of this de-dollarization trade, this debasement trade. Unclear whether actually seeing it play out in financial markets. But when it comes to the physical market for gold, when you get reports of bullion being transferred to, you know, places like the U.K.

34:30Morgan Brennan: on the behalf of other European central banks and governments, when you hear about stockpiling in places like China, how much is this happening right now? I think that all plays to the question of uncertainty, you know, is the market confident in what's going on in the U.S. right now? And, you know, what are those governments, what are governments like Germany and the Netherlands and France and so forth? What are they indicating to the market when they transfer their physical bullion out of New York and bring it back to London? At the very least, it's a symbolic message that those countries are less confident in holding their gold in New York, regardless of what they say.

35:26You know, they'll move it and they'll say, no, you know, we're just we're just, you know, these are normal treasury operations for us. And maybe so. But I think the indication to the market is that they're somewhat losing confidence in storing their gold in the U.S. And that has a very strong effect on market thinking.

35:48Morgan Brennan: What does it mean for Alamos gold and your ability and your process to pull the metal out of the ground and meet the demand? in the marketplace? Higher gold prices ultimately mean higher profits for Alamos Gold. That's pretty easy to figure out. But we're on a very strong growth trajectory as a company, and that's part of the reason why we've been doing very well in the market over the last number of years. We've had tremendous exploration success in our Canadian operations. And we've never had higher reserves than we have have today despite the fact that that we've been increasing production as well so our exploration success has gone a long long way to backing underpinning the growth that's going on in Elmos right now and particularly with developments at our Island Gold project we're going to see production double at Island Gold over the next few years as we complete a billion-dollar investment in a shaft, and we transform that operation from a ramp-driven operation to a shaft-driven operation.

37:03It's quite an exciting development for the company. It brings down costs, and it raises gold production. So we're going to see our production ultimately go from current level around 500 ,000 ounces a year. We're going to see them grow to about a million ounces a year as those mines take hold. Mm.

37:23Morgan Brennan: In light of that, I find myself having these conversations with miners in copper and other types of metals and materials as well. But the fact that you do operate in what would be considered a more geopolitically stable place like Canada right now, how much does that drive a demand premium for what you're doing? Well, I think it really does. You know, the world, you know, investors are not comfortable with geopolitical risk in the world right now. The world's becoming a more dangerous place. And as that happens in countries like Canada, the United States, Australia and so on, those jurisdictions command a premium in the market.

38:07You know, Canada's our home base. We're a Toronto-based company. we took a decision about 12 years ago we were operating in mexico we had operating mines in mexico but we took a decision then that you know canada was a great place to to be exploring there was lots of opportunity here and we made some acquisitions and then off the back of those We had some tremendous exploration success. We followed that up by building bigger and better mines. And so by now, we've raised our production from roughly 150 ,000 ounces a year, where we were about 10 years ago, over 500 ,000 ounces a year now. And we're on our way to a million.

38:53And we've done that off the back of investing heavily in Canada.

38:58Morgan Brennan: Okay. John McCluskey, great to have you on, CEO of Alamos Gold. Thank you. As we head to break, let's get a check on shares of Planet Labs because those are jumping on the back of earnings. Big Q2 beat. That's some softer guidance. This is tied to a pull forward of a satellite related delivery. Shares are spiking 10 percent nonetheless and seeing a lot more demand. And that's showing up in the revenue mix for defense related business for this company as well. We'll be back after this. Let's get a market flash on credit reporting agencies. Under pressure after the director of the federal housing, Bill Pulte, said yesterday that he has directed Fannie Mae and Freddie Mac to approve all lenders to use credit scoring system Vantage Score, adding, quote, FICO has enjoyed a monopoly and more.

39:47Morgan Brennan: In a separate post, Pulte said credit reporting agencies Equifax, Experian and TransUnion have been overcharging Americans for, quote, far too long. All of these names that are publicly traded are under pressure this morning. Straight ahead, the Morning Call crew teeing up the trading day ahead. Why one member says today's jobs report may put more pressure on upcoming inflation reports. It's time for your call sheet where we look at the topics driving the trading day ahead. Crew members today, Victoria Green of G-Squared Private Wealth, also a CNBC contributor, Thomas Martin of Global Investments, and Henrietta Trays of Beta Partners is back with us as well.

40:24Morgan Brennan: All right, let's kick this off with the big economic news of the day. That is a jobs report. Vicky, I'll start this with you. What are you watching for it? How much of this could potentially be a market mover or not? Oh, I think it's a huge market mover. We're expecting to add about 55 ,000 jobs. Jolt was in line, ADP a little bit light. Honestly, you're hoping for a little bit of a miss here. Not a terrible miss, but a light job report would allow them to get a little bit more concerned and a little less pressure on the inflation report next week. I think next Friday, CPI is the event here in September, because if that comes in hot at all, everybody's indicated that's what they're looking for if they're going to do a September hike.

41:02And right now, odds across the board, you look at Polymarket, Calci, Fed Fund features, it's a 50-50 coin flip. So we kind of hope jobs are a little bit light today because maybe the Fed has to pay attention to the employment side and not just hyper-focused on inflation next week.

41:15Morgan Brennan: Yeah, I mean, a lot of a lot of messaging, whether it's Fed share worse last week, whether it was Waller, Chris Waller, Governor Waller yesterday is signaling that inflation is really where the Fed is focused now, Thomas. And in terms of that, you've seen a Fed funds futures that's run up to 70 percent. Now it's come back down to about 50 percent odds of a hike in September. You know, how is an investor to navigate all of it? What are the key inputs to watch record diesel prices? Is that going to be one of them now? Well, sure. So when you're at 50 percent coin flip for whether or not the Fed's going to raise and you actually have a governor saying we're going to pay attention to one report, whereas the Fed usually says that, you know, no one report makes a difference.

42:00You have a lot of uncertainty in the market. And it just means that somebody is going to be disappointed. At least half the people are going to be disappointed unless things change. There is a low bar for raising rates. You know, if the economy is not weak based on the employment report and if inflation is a little bit hot, that's going to kind of move the button towards a potential hike.

42:26Morgan Brennan: Henrietta, one of the other things that I think isn't necessarily factoring into this, but maybe should, is the optics, the optics of being political for the Fed. I would imagine that the bar is actually higher for the Fed to make a move in any direction ahead of the midterm elections. Absolutely. I was going to say, Warsh is working on borrowed time here. The elections are November 3rd, and your options are to hike in September or October or both. I think it is a huge political risk. It obviously risks the ire of President Trump. And the issue, of course, for both Russia and the president is that the inflation rates are so high because of the one-two punch of the Iran war that has shut down the street and had that flow through, as you mentioned, to diesel prices that inputs to 6 ,000 different product lines.

43:13So if the Fed is looking at what to do on inflation, it sees the war is not ending. The street remains closed. Russia and Ukraine continue to expand. The drones are hitting refineries. Meanwhile, our refineries are operating at 98 percent capacity or above. You don't have the option of taking the war lightly. With 6 ,000 different inputs, you've got to pay attention to it, acknowledge it. And of course, there's really nothing the Fed can do to offset higher commodity prices on either gas or diesel or jet fuel. So it's a catch-22. But on the timing front, I have to say, I would rather do September than October if I was the president and worse.

43:51Morgan Brennan: Vicky, I mean, the other piece of this, of course, is that we're just it's been a gangbusters earning season. That's expected to continue here for S &P 500 companies, at least. But when you talk about the economic growth story, it's also not just a U.S. one globally. Things have largely managed to hang in there, which perhaps is part of the reason we have seen this run up in rates globally? Yeah, I think everybody's saying, look, it's not that bad, right? We're facing all of these headwinds. We're facing high oil prices. We're facing geopolitical uncertainty. But the markets keep going on. We are seeing growth.

44:25A lot of that's being driven by the build-out in AI, the excitement and the infrastructure needed there, the technological innovation, the amount of money being poured in and CapEx being spent. That's a huge stimulus to any economy. So we are still moderately bullish. Obviously, September's typically not the best month in the world. But we look around and say earnings are great. Economically, we're still growing even despite these headwinds, which is a major feat considering record diesel prices, you know, the amount of uncertainty, a very fraught upcoming election. A lot of investors get worried.

44:55And I keep telling them politics matters much less to the market than they do to the portfolio, to the markets than they do to you personally. So make sure you take a step back as we're hitting election season and saying, hey, look, look at the data, look at the facts. Make sure you take your personal beliefs out of how you're building your portfolio, because it can get a little bit dangerous trying to pay politics with money.

45:15Morgan Brennan: And of course, we're in a seasonally, historically seasonally weak time of the year, Thomas. But we we've had tech earnings this week. We've had some consumer earnings this week. It's been largely a mixed bag. And then from a macro standpoint, you have had volatility, even if it's not in the U.S. stock market in other markets like FX with the yen? Yeah, I think the most important thing to focus on is sentiment right now. And it's been a sentiment driven market all year, really, with AI and the movement in stocks, and then most recently with the movement in bonds. And right now, bond sentiment is low.

45:51Everybody thinks that interest rates are going to continue to go higher, and they certainly have. And sentiment on stocks remains very high. So despite rises in oil prices and potentially in inflation and in yields, stocks are holding up in the seasonally week period. You know, high sentiment or low sentiment at extremes doesn't necessarily mean it can't be maintained for a while. So it's not a good thing to bet for or against. But it does tell you something about where investors are positioned and where the risk is.

46:27Morgan Brennan: OK. I mean, bond sell-off has been the big story overall this week, Henrietta, and part of that story has been fiscal imbalances, at least here in the U.S. We have lawmakers kicking the can with a continued resolution, at least until after the election here. So is there a world in which this actually gets addressed? Not anytime soon, no. I think what you're looking for, if you're an investor and you want to project out into the future. You want the president to be from one party and the House and the Senate to be from another. That is a situation that requires mandatory bipartisanship, creates pressure on whoever the sitting president is and the House and Senate members.

47:04And that bipartisan divide is going to be what's essential for any any package to address our fiscal situation. But I would say that's a twenty twenty nine or the earliest.

47:14Morgan Brennan: OK, well, thank you so much to our morning call crew. Great to have you all here. Have a wonderful weekend. Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just$5. Only at McDonald's for a limited time. Price and participation may vary. Promotion pricing may be lower than meal pricing.